Area lawmakers look to White House

Donnelly, Upton, Lugar want help for auto industry.

Donnelly, Upton, Lugar want help for auto industry.

December 13, 2008|By ED RONCO Tribune Staff Writer

It's up to the White House to step in and save the U.S. auto industry, according to local members of Congress. Thursday night, a $14 billion loan from the federal government to the stalling automakers collapsed in the Senate. Representatives and senators from Indiana and Michigan now say only the U.S. Treasury can save Detroit's biggest industry -- by using some of the money set aside to help the financial services industry dig out of its mess. "Without action, 3 million middle-class jobs and the U.S. economy hang in the balance this holiday season," said U.S. Rep. Fred Upton, R-St. Joseph. The White House said Friday it would step in to prevent the "precipitous collapse" of the U.S. auto industry. Upton and most of Michigan's congressional delegation sent a letter to President George W. Bush, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke on Friday, urging them to immediately issue the loans, saying swift action is necessary so the companies can hold on until the next Congress convenes Jan. 6. South of the state line, U.S. Rep. Joe Donnelly, D-Granger, said he was "frustrated" the deal stalled in the Senate. About 15,000 people in Donnelly's district count on the U.S. auto industry for all or most of their work. "If any of the Big Three automakers were to fail, the cost to our economy, both in dollars and jobs, would be staggering," Donnelly said. The deal fizzled out in the Senate after some GOP senators wanted union workers to take immediate wage cuts in exchange for the loan. The union said it would take wage cuts, but not until its contract expired in 2011. Indiana Sen. Richard Lugar, a Republican, said he wanted to see the loan measure brought to a vote, and expressed disappointment that it collapsed Thursday. "A new Congress will be in place in a little more than three weeks, and will be able to again consider options," said Lugar, echoing calls for the Bush administration to loan money to the car companies. Lugar helped engineer the deal that saved Chrysler from collapse in 1979. Back then, the government sent $1.2 billion to Chrysler, which repaid the loans at a profit to the feds. Opponents of loaning money to the car companies say bankruptcy is a better option, and that a bankruptcy judge would have more authority to quickly restructure the companies. But bankruptcy at a major U.S. automaker -- or two, or three -- is different than at other companies, said Donnelly. Automobiles are long-term purchases, and bankruptcy discourages people from buying the vehicles, especially if they believe the manufacturer won't be around in a few years to supply parts and honor warranties, he said. The Associated Press contributed to this report.